Firms face $400 billion tobacco suit

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A $US280 billion ($400 billion) racketeering lawsuit against tobacco companies accused of misleading the public for almost 50 years about the risks of smoking is to open in a US federal court today.

The civil action, the biggest ever brought by the Justice Department, could knock the puff out of the massive tobacco industry, forcing it into big increases in cigarette prices and changes in the way it markets and promotes its product.

The industry may also have to spend billions of dollars helping people to stop smoking.

The case has already produced 120 million pages of documents at a cost of $US135 million in taxpayer funds and untold millions more in legal fees for the industry.

Government lawyers, seeking repayment of "ill-gotten profits", will try to prove that the tobacco companies:

Denied that nicotine was addictive, even though they knew it was;

Promoted "light" cigarettes as safer than traditional brands despite knowing they were not;

Continue to deny the extent of the harm from second- hand smoke.

Potentially incriminating documents from British American Tobacco in Australia have already been the focus of several appeals. A district judge ruled the company had to turn the documents over to the Government, and that issue is before the Court of Appeals.

Philip Morris was fined $US2.7 million for deleting emails that may have been relevant to the Government's case.

But the suit, which was brought during the closing years of the Clinton administration and almost dropped early in the Bush Administration, poses some risk to efforts to control tobacco.

Proving there was a racketeering conspiracy to create doubts about the health risks will be difficult. The industry points out that cigarette packets have carried warning labels since the 1960s, and in 1998 it entered a settlement with 46 states over some of its most controversial actions.

As a result, tobacco company share prices have not been seriously damaged.

"The fraud is that the companies knew about the health risks but created doubt and controversy about them to maintain their sales," said William Schultz, a former Justice Department lawyer who helped develop the case.

The tobacco companies deny there was ever any fraud.

"Obviously, no company wants to be facing charges like these," said William Ohlemeyer, associate general counsel of Philip Morris, the biggest tobacco company in the US and one of eight defendants. "But if there's any upside for us, it's that now the Government will have to finally prove their allegations."

The Government will try to portray the work of the Tobacco Institute and the Council for Tobacco Research as a public relations campaign to deny the harm of smoking. Both organisations have been disbanded.

Soon after taking office the Attorney-General, John Ashcroft, belittled the Government's case, and it was revealed that the Government held talks with the industry about settling out of court. But many state attorneys-general protested and the case went ahead.